Israeli Health Insurance System Creates Double Payments, Hides Overlap
The "Har Habituach" (Insurance Mountain) service, designed to consolidate all insurance policies held by an individual, fails to display supplementary health insurance plans offered by Israeli HMOs. This omission prevents users from identifying duplicate coverage and potential overpayments. Approximately 3.4 million Israelis, or 37% of those covered by national health insurance, hold private commercial insurance alongside their HMO plans. Crucially, about 95% of these individuals are also enrolled in HMO supplementary plans, leading to significant overlap.
The primary overlap occurs in coverage for surgeries, which can constitute 40% to 70% of a private policy's cost. Section 56 of the Insurance Contract Law dictates that holding two indemnity policies results in double payment rather than double coverage. In cases of indemnity insurance, the payout aims to restore the insured to their pre-event financial state, meaning multiple policies only yield a single payout. Section 59, which addresses duplicate insurance and mandates cost-sharing among insurers, is explicitly excluded from disease insurance.
There is no reimbursement mechanism between private insurance companies and HMOs, except for expensive treatments abroad. Consequently, each entity collects its premium separately without any inter-company reconciliation. Policy cancellations take effect within three days, and policyholders can cancel at any time. Retroactive refunds for premiums paid over years are rare, leaving previously paid money with the insurance company.
Canceling a policy can be costly, with a potential 40% increase in premiums if one wishes to re-enroll later due to the loss of insurance continuity. Re-enrollment requires new underwriting, assessing the applicant's current health status. Individuals who have fallen ill since their initial cancellation may find their coverage reinstated under worse terms. A 60-day window exists to reverse a cancellation and preserve continuity; missing this period means starting the process anew.
In contrast, when switching between HMOs, a 90-day period preserves seniority in supplementary plans, and medical underwriting is entirely absent. HMOs are obligated to accept all members regardless of age, a key difference that makes forfeiting HMO supplementary coverage riskier than dropping private insurance.
A directive prohibits insurance companies from enrolling a new policyholder in coverage that duplicates existing coverage, requiring a "duplicate insurance" disclosure field. This rule applies only to new policyholders, leaving those with older policies unprotected. The State Comptroller recommended extending this rule to existing policyholders. An automated interface between insurance companies and HMOs, updated quarterly, aims to detect duplicate policies. A reform implemented last year mandates prior notification and automatic transfer of policyholders. The Capital Markets Authority previously estimated annual overpayments at NIS 760 million, though the State Comptroller later stated the Authority possessed incomplete data on the phenomenon's scope.
